By Michael Wursthorn and Ben St. Clair
-- Stocks rebound from Wednesday's fall
-- China guides its currency lower
Surging shares of technology companies sent the Nasdaq Composite to a new record, as major indexes rebounded from a trade-fueled midweek stock selloff.
Tech firms led the stock market higher, as investors returned to the pro-growth investment strategy that has worked throughout much of the long-running rally. A major software-deal announcement appeared to underscore the buying spree, sending the S&P 500 technology sector up 1.8%, the most of the broad index's 11 major sectors.
Meanwhile, investors momentarily put aside their brewing trade concerns a day after the Trump administration threatened tariffs on an additional $200 billion of products from China, including bicycles, refrigerators and pocketbooks. Beijing is currently reviewing plans to hit back beyond levies on imports, although no new policies have been announced.
"We don't know how it's going to pan out," said Tom Martin, a senior portfolio manager at Globalt Investments. "But the market is understanding more and more that President [Donald] Trump isn't bluffing."
The tech-heavy Nasdaq Composite rose 107.30 points, or 1.4%, to 7823.92, surpassing its previous record set in June. The index notched its biggest percentage gain since June 1. The Dow Jones Industrial Average rose 224.44 points, or 0.9%, to 24924.89, while the S&P 500 gained 24.27 points, or 0.9%, to 2798.29.
CA led tech firms and the broader S&P 500 higher after Broadcom agreed late Wednesday to buy the software company for $18.9 billion. Shares of CA surged $6.94, or 19%, to $44.15 and appeared to boost the stocks of other software companies that trade in the S&P 500, including Activision Blizzard, which gained 2.76, or 3.5%, to 81.37, and Salesforce.com, up 2.91, or 2%, to 148.16.
Broadcom investors weren't as enthusiastic about the deal, sending shares down 33.46, or 14%, to 209.98.
Industrial companies, including aerospace firms, also contributed to Thursday's better performance, recovering some of the losses those firms suffered during Wednesday's selloff. Shares of Boeing, for example, added 5.43, or 1.6%, to 346.03.
Several airlines, another industrial cohort, were also trading in positive territory after Delta Air Lines reported profits that beat analyst expectations, even though the company said higher fuel costs will weigh on profits for the rest of the year. Shares of Delta added 89 cents, or 1.8%, to 50.73.
Investors expect second-quarter earnings, which kick off in earnest Friday with reports from several major banks, to offer clues on how the continuing trade tensions are affecting companies and how businesses are faring with higher commodity prices.
If either of those factors eat into second-quarter profits or appear poised to drag down future earnings, investors will likely recoil from those affected stocks, analysts said, even though S&P 500 companies are projected to notch another double-digit earnings gain from a year earlier.
"We're at a situation where the markets have to react to the uncertainty, " said Jim Smigiel, chief investment officer of absolute-return strategies for SEI Investments.
Barring any major hiccups, investors hope the earnings growth will help stabilize stock prices and push major indexes firmly higher. Analysts are projecting a 13% price increase in the S&P 500 over the next 12 months, mostly driven by companies' profit gains, FactSet said.
The stock market also got a fresh sign that inflation is moving higher. The consumer-price index, which gauges the prices Americans pay on most goods, rose 2.9% in June from a year earlier, the highest level since February 2012, the Labor Department said.
Investors have been warming to the idea of rising inflation all year, especially after the January jobs report helped send major indexes into correction territory in early February. The latest data put inflation closer to where the Federal Reserve wants it, analysts said.
"Inflation doesn't look like it's getting out of control and to a place where people need to react," Globalt's Mr. Martin said.
Elsewhere, the Stoxx Europe 600 rose 0.8% and is up seven of the past eight trading days. In Asia, Hong Kong's Hang Seng was up 0.6%, while the Shanghai Composite Index rose 2.2%. Japan's Nikkei rose 1.2%.
Stocks in Asia rose after China's central bank guided the yuan to its largest one-day drop against the U.S. dollar in a year-and-a-half. A weaker yuan makes Chinese exports more competitive and its goods more valuable abroad.
Write to Michael Wursthorn at [email protected]